A primary goal for CECL was to provide more reliable information on credit loss exposure to outside investors. However, outside capital is not even available to most credit unions. The standard is addressing a problem which simply does not exist within the credit union industry.

For many credit unions, CECL will likely necessitate increases to allowances for loan and lease losses (ALLL), which would constrain healthy growth. Furthermore, the current lack of clarity regarding what constitutes a reasonable and supportable forecast could result in overly conservative provisions for expected credit losses.

For additional background, credit unions should consult NAFCU’s CECL FAQs.